Report: Food Hub Analysis for Far Southern Illinois

Shengdi Chen, Yucheng Ding, Jessica Gal, John Kim, Amy Liu, Maximillian Mahalek, Nancy Smebak, Xinyu Zhang

Regional Food Hub Analysis:

Southern Illinois

Appendix........................................................................................................................................19 1. Site Visit Observations................................................................................................................................19

CONTENTS

Executive Summary.......................................................................................................................3

Introduction....................................................................................................................................4

Methodology....................................................................................................................................6 1. Supply Variables............................................................................................................................................6 2. Demand Variables.......................................................................................................................................10 3. Transportation Variables............................................................................................................................12

Weighting.......................................................................................................................................14 1. First mile.......................................................................................................................................................14 2. Last mile........................................................................................................................................................14

Analysis...........................................................................................................................................15 1. Maps..............................................................................................................................................................15 2. Policy considerations..................................................................................................................................18 3. Limitations/potential for future research...................................................................................... ..........18

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Executive SummaryAgriculture is the largest contributor to southern Illinois’ economy. However, the region’s significant agricultural output typically leaves the state, and food consumed locally is sourced from outside the state, especially in counties nearest Missouri and Kentucky. Calculations from New Market Ventures MarketSizer tool, relying on statewide local foods consumption and production estimates, suggest an unmet demand for wholesale produce, poultry, and dairy products of $83 million for the 18-county region1. This unmet demand represents more than 75 percent of the region’s total estimated demand for these foods. Although larger specialty crop producers in the area have adapted to industrial-scale food production, small farms face many challenges.

Some small farms may benefit from shared marketing and distribution services. A food hub that can assist small producers in aggregating, processing, packaging, and distributing products may increase small farm viability. These services may help attract young farmers to southern Illinois.

This report identifies more suitable locations for a food hub in !southern Illinois. At the core of a food hub are the producers, consumers, and infrastructure. These components, represented by population and food purchaser density, food production sites and capacity, and transportation infrastructure have been mapped for southern Illinois. Analysis in Geographic Information Systems (GIS) software incorporated these factors to identify more suitable locations for a food hub. Factors beyond what have been mapped may influence the success and location of this facility. These limit the study’s applicability.

A 2014 “New England Food Hub Site Suitability Analysis” produced by the Wholesome Wave Initiative serves as a precedent for this project. Criteria are used for this study vary slightly from the precedent. The following chart outlines the process and criteria used for creating the suitability model.

1 New Venture Advisors, LLC Local Foods MarketSizer http://newventureadvisors.net/marketsizer.php

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IntroductionThis study was conducted by undergraduate and graduate students in Dr. Bev Wilson’s Small Town and Rural Planning Workshop at the University of Illinois at Urbana-Champaign, in partnership with University of Illinois Extension. The study was guided by Extension Educator Ronald Duncan from Unit 27, serving the counties of Alexander, Johnson, Massac, Pulaski, and Union. The report contributes to the conversation of local food production in southern Illinois, while mapping serves as a tangible starting point for locating a food hub. What is a Food Hub?

According to the National Good Food Network, a food hub is an organization that manages the aggregation and distribution of source-identified food products, primarily from local producers. Food hubs strengthen producers’ ability to satisfy wholesale, retail, and institutional demand2.

Why a Food Hub?

A food hub is an important potential contributor to southern Illinois’ economy and quality of life. Food hubs may influence a region in many ways. For example:

• Agriculture is significant part of the local economy.• Food access is a necessity for daily life for all residents.• The benefits of a sufficient, healthy, local food supply are felt in a community’s public health and overall

quality of life.• Institutions related to food are a critical part of neighborhood revitalization.• Food hubs may provide better access to food for low-income residents.

Southern Illinois’ agrarian community needs social and physical infrastructure to promote economic development. Building local foods infrastructure, such as a food hub, is a chance to provide economic opportunities and broadly improve quality of life for local residents. Planning for such projects should incorporate a holistic view that considers the built environment, existing infrastructure, agricultural productive capacity, and areas of demand.2 “Food Hub Center”. National Good Food Network. 2009. http://www.ngfn.org/resources/food-hubs

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IntroductionSouthern Illinois Study Area

The counties that comprise this study area include Washington, Jefferson, Hamilton, White, Gallatin, Saline, Franklin, Williamson, Jackson, Perry, Randolph, Union, Johnson, Pope, Hardin, Massac, Pulaski, and Alexander (as seen in the map found below). The region’s significant agricultural output typically leaves the state, while food consumed locally is sourced from outside the state. Commodity markets place limits on income from local agricultural labor, marketing, and food processing labor, thereby limiting profits to local companies and workforces.

A humid climate facilitates agriculture’s dominant role in the regional economy. Corn, wheat, and soybeans characterize the main crop production, although specialty crops remain viable.

The counties with the highest agricultural employment share in recent years were Gallatin, Hamilton, Hardin, White and Pope. In 2011, Saline replaced Pope in the top five counties. All six of the counties noted are located in the southeastern section of the study area. According to the Bureau of Labor Statistics, Illinois’ projected employment in agricultural production will grow by four percent by 2022, which is higher than many other sectors3.

3 “Employment Projections Home Page.” Web. Accessed at http://www.bls.gov/emp/

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MethodologyMethods

To determine overall suitability, component factors were combined in a weighted overlay using the Spatial Analyst tools in ArcGIS, a computer-aided mapping software. Factors were translated into a standard 1-7 suitability scale. Relative weights for each factor were determined by researcher consensus and ranged from 2-5. Factors and weights were then summed to determine relative suitability for two types of food hubs--”first mile”, aggregation-focused hubs, and “last mile”, distribution-oriented hubs. The two food hub types represent different business models and different location criteria. By conducting two analyses, areas that meet each set of criteria have been identified. The following table outlines weighting schemes under supply, demand, and infrastructure categories.

Variables

Under each of the categories listed below, data sources were found to represent the local food supply, distribution and storage infrastructure, and potential demand in the region. All data was imported from the public and private sources.

Supply Variables

Small to Mid-Size Farms

The USDA defines small and mid-size farms. Small to mid-size farms are those producing on 1,000 acres or less, and these farms constitute the targeted producers for a food hub. Although food hubs are not necessarily exclusive resource for only small to mid-size farmers, these farmers may benefit most from a food hub’s services. For this reason, counties that have a greater number of small to mid-size farms are more likely to benefit from the presence of a food hub. Each county’s suitability rating of 1 to 7 was based on the total number of its small to mid-size farms.

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MethodologyThis data is from the 2012 USDA Census of Agriculture4, which counts the number of farms in each category ranging from 1 to 9 acres to greater than 1,000 acres of land farmed. County-level reporting places limitations on this variable and the “Vegetable Operations” variable. Census of Agriculture data does not allow identification of small to mid-size farms and vegetable operations locations. The Cropland Density variable can help account for this limitation.

Vegetable Operations

In contrast to conventional grain crops, vegetables are more likely to contribute to regional food consumption. Counties with the most vegetable-producing operations were identified. The variable counted the total number of facilities with primary vegetable production goals per county. The data was obtained from the 2012 Census of Agriculture, which relies upon information provided by farmers, and may not represent a full census of all producers. In this study, the highest tier of vegetable operations received a 7 while the lowest tier was assigned a 1.

4 “USDA Census of Agriculture (2013)”. Web Accessed at http://www.ers.usda.gov/data-products/chart-gallery/detail.aspx?chartId=38238

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MethodologyOrchard LocationsOrchards and farms specializing in agrotourism and on-farm sales and services are important because of their present contributions to the local foods economy. Farm and orchard addresses were obtained from ESRI’s Business Analyst service and were geolocated for mapping purposes. Each section of the study area was evaluated to determine the number of farms and orchards within a 5-mile radius of the site. The locations with more than 5 farm and orchards within 5 miles received a suitability rating of 7, while locations with no facilities within 5 miles were rated 1. Each orchard was geocoded with a precise location, so (pending accuracy of geolocation) the variable in total could inform a parcel level examination.

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MethodologyCropland Density

The National Agricultural Statistics Service (NASS) Cropland Data Layer uses satellite imagery to evaluate land use and crop production. Based on aerial imagery, each pixel of this dataset measures 30 by 30 meters at ground-level and represents what is being grown on the land.

Fruit and vegetable plot locations for crops like celery, cucumbers, ornamental corn and popcorn, and pumpkins were selected. Non-agricultural uses and those not reflective of specialty crop production (e.g., row crop corn and soybean and grain production) were excluded. This data identifies specialty crop production locations. The raster cells in this data were converted to point features and using a 5-mile radius point density calculation, proximity of these features produced a suitability raster.

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Demand Variables

Population Density

Population density (as of the 2013 American Community Survey) was analyzed for all census block groups within 30 miles of the study area. This variable reflects a relative expected level of consumption. Census block groups were selected as the geography for analysis, as this is the smallest level that reliable data is available for from the year 2013. All census block groups within 30 miles were selected, as this is a reasonable distance one may travel to purchase food.

(Map HERE)

Methodology

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Institutional Food Purchaser Proximity

Schools, prisons, and nursing homes that provide food service often purchase food in large quantities. These institutional food purchasers provide a potential customer base for a local food hub. Because institution locations do not always coincide with population density, their locations are considered independently.

The location data for these points was collected from the online mapping engine SimplyMap based on NAICS and SIC codes (for prisons), from the Illinois Department of Health Listing (for nursing homes), and the Illinois Department of Education (for public school locations). Addresses of locations were geocoded. Locations were not weighted based on the number of meals or persons served, because no consistent listing of these demand factors is available.

(Map: inst density)

Methodology

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MethodologyFood Storage Locations

Refrigerated food storage facilities located within 30 miles of the study area were considered in our suitability analysis. Of the five facilities listed by Business Analyst, only one was located in the actual study area (in DuQuoin, Perry County), and one facility could not be verified online and was discarded. These facilities can serve as a resource to the food hub as producers seek to keep their products fresh during distribution. Future analysis may investigate the sizes of these facilities, what type of products they typically store, their customer base, and their refrigeration capacities.

Transportation

Transportation variables were obtained from the Illinois Department of Transportation and from ArcGIS Online. Within the study area, the transportation infrastructure is generally sufficient for food delivery. Three main interstate highways traverse the study area diagonally. All three intersect with state routes and form a total of 116 ramps. A high number of ramps provides convenience for food delivery and attracts visitors from outside the region to access the proposed food hub. Radial distance from interstate ramps determines site suitability. Locations within 5 miles of a ramp receive a rating of 7, those within 5-10 miles receive a rating of 5, those within 10-15 miles receive a rating of 3, and locations greater than 15 miles receive a rating of 1.

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MethodologyHighway location was also considered, as transportation is not limited to interstates. Assuming highways can accommodate increased truck traffic, the location of a food hub near them will be suitable. Suitability ratings are given at ½ mile (7), ½ to 2 miles (5), and 2-5 miles (2). No portions of the study area were more than 5 miles from a highway.

Site Visit

In April 2015, the students conducting this analysis traveled to southern Illinois to meet with potential food hub stakeholders. The trip was organized by the University of Illinois Extension’s Ronald Duncan. The group met with representatives from an orchard and agrotourism site (Rendleman’s Orchard), a vineyard and winery (Russell Hill Winery), the University of Illinois’ Dixon Springs Agricultural Research Center, specialty crop producers, and a beef producer.

Rendleman’s Orchard provided strong insights into how a producer functions and attempts to streamline their processes. Meanwhile, the visit with Russell Hill winery illustrated the success of an emerging portion of southern Illinois’s economy, while conservations with the beef producer highlighted the regulatory difficulties that this industry faces. The Dixon Springs Agricultural Research Center focused on new tools that the University of Illinois Extension is attempting to develop to enhance agricultural performance in a safe and healthy way, while discussions with agricultural producers addressed the economic difficulties facing farmers. A complete discussion of topics addressed during the site visit is included in the appendix.

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WeightingFirst Mile SuitabilityFirst-mile food hubs primarily serve producers as aggregation and sorting sites to prepare produce to be brought to market. Factors considered in determining first-mile food hub suitability included proximity to highways and interstate on-ramps, number of small to mid-size farms in each county, number of vegetable operations, cropland and orchard density, and proximity to refrigerated storage locations. These factors were given relative weightings on a scale of 1-5, with weightings assigned by researcher consensus and based on project precedents. Factors receiving a weighting of 5 included Small to Mid-Sized Farms, Vegetable Operations, Cropland Density, and Orchard Locations. Highway proximity was weighted 4. Food storage locations and interstate on-ramps received a rating of 3, reflecting their relative scarcity in the region and relative unimportance for food aggregation.

Last Mile SuitabilityLast-mile food hubs serve primarily as distribution centers to deliver local produce to retail operations and institutional wholesale purchasers. Factors considered in last-mile food hub suitability included proximity to population density, proximity to interstate ramps and highways, institutional food purchaser density, and food storage locations. Population density, institutional density, and highway proximity received a weighting of 5, reflecting a primary purpose of serving consumers. Proximity to interstate ramps was weighted 4, reflecting suitability for long-distance distribution--but a primary focus on serving local markets. Refrigerated storage locations were weighted 3, reflecting their relative scarcity in the region and researchers’ uncertainty about their ability to accommodate local produce.

Following weighting procedures, calculations were carried out in ArcMap’s Raster Calculator tool to produce final suitability maps. Relative suitability was symbolized with graduated color scales.

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First Mile

Union County proved to be the most viable for a first-mile food hub due to its concentration of orchards and vegetable operations. Jefferson County was the next optimal location because of its high number of orchards and small to mid-sized farms. These conclusions were drawn from the final raster-based map and individual variable maps. Each county has a unique advantage over the other, and how to prioritize these advantages will depend on market characteristics and stakeholder interests around the time of planning and implementation. Parcel level analysis will give necessary direction for future suitability research.

The conclusions drawn at the county level weigh heavily in the method employed for parcel level analysis. Union County’s propensity for vegetable operations and Jefferson County’s abundance of small farms suggests that future research consider the unique social and economic implications of these traits, including growing seasons and labor markets, and the extent of the network required for vending or the profit generated.

Analysis

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Last Mile

Williamson and Jefferson Counties were top candidates for last-mile food hubs because of their high number of institutions, population density, and transportation infrastructure. Massac County was the next viable option because of similarly significant population density and transportation infrastructure, with Union County a close third. Franklin, Jackson, and Perry Counties ranked lowest for possible candidate locations because they lacked suitable traits beyond population density. These conclusions were also drawn from the final raster-based map and individual variable maps.

Analysis

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Analysis

In addition to the consideration of market and stakeholder issues, and using unique traits to inform parcel level research, last mile results should be understood in relation to first mile results. Areas of overlaps, or situations where there may be “the best of both worlds”, need to be identified. Jefferson and Union Counties standout as such locations. This suggests further investigation of their feasibility for a food hub.

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AnalysisPolicy Suggestions

Based on this research and discussions with Ron Duncan and producers, recommendations are made to enhance the success of a food hub and improve Illinois’ southernmost 18 counties’ agricultural economy.

• Immigration reform is seen as key to ensuring that the smaller-scale and family-run farms of southern Illinois survive, as farms typically rely on immigrant workers.

• Southern Illinois (and the United States in general) is contending with a falling number of young farmers. Incentives aimed at having young people enter farming need to be developed, reformed, and advertised. Such incentives may include subsidized loans, tax breaks, and tax credits. Many of these programs do exist under current agricultural policy, but they primarily serve commodity producers. Some food hubs provide these “technical assistance” services to their members, and this programming could be incorporated into a socially-oriented business model. Furthermore, bureaucracy often slows the implementation of such incentives, particularly in Illinois.

• Reduce the burden from regulatory/certification schemes while ensuring the production of a healthy product.

• Make it easier for foods to be exported over state lines.• Regionalize broker operations to better support local agrarian economic efforts.• Better incentivize collaboration amongst producers.

Future Research

Analysis allowed identification of suitable food hub locations in southern Illinois, if stakeholder interest and funding sources were cultivated. Our study does not evaluate financial feasibility of a food hub, but rather relative locational suitability. Based on quantitative variables, some locations are more suitable than others. Not all potentially significant factors are represented in this analysis. Subsequent research on the success of a food hub may investigate the consumer market and preferences (i.e. identifying what products are desired) and on how to alleviate the obstacles hindering small startups.

Additionally, more qualitative research into farmer reactions to the establishment of this type of facility and community interest could help modify this analysis. This study establishes a baseline for further research into the design and function of a food hub and its economic impact.

As an alternative to further speculative study, producers may consider organizing incremental “trial” projects to test local foods markets and the value of cooperation in meeting demand. Producers in central Illinois have found value in developing collaborative community supported agriculture models that share food hubs’ emphasis on joint marketing, sorting, and distribution.

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Appendix Site Visit Observations

Rendleman’s Orchard (http://www.rendlemanorchards.com/):

• Some food hubs emphasize processing or storing food, while others sort and distribute food. Any type of hub would be capital intensive.

• It may be more cost-effective to utilize an existing warehouse-type building for a food hub than to build a new structure.

• Staffing a food hub may be challenging, given annual fluctuations in agricultural productivity. Can the building’s use change in the off-season?

• Governance and funding of a food hub are important considerations, and locating a structure where appropriate oversight can be provided may be an important consideration.

• Rendleman’s has accumulated production and processing infrastructure over 142 years; a new food hub would start on a much smaller scale.

• A food hub could also focus on processed foods, including hard cider, apple sauce, dried fruit, and oth-er preserved products.

• Proximity to the highway has been essential for the orchard’s success. Food Hub locations need to ensure road capacity can support heavy truck traffic.

• Diversification of crops and immigration reform--as a means to supply an agricultural labor force--are current keys to small-scale agricultural production’s viability.

• There is a great need to create incentives for young people to work in agriculture.• Good Agricultural Practices (GAP) certification is preferred for all types of producers, as it being cer-

tified ensures that products are safe from the time they are picked up until their sale to a wholesaler. However, the documentation requirements for GAP certification pose challenges to small operations. A food hub may offer GAP technical assistance to its producers, further emphasizing a need to be proxi-mal to growing locations.

• Railroad connections in Union County facilitated specialty crop production in the early 19th century, as railroads made it easier for products to reach buyers in St. Louis and Chicago.

Rustle Hill Winery (http://rustlehillwinery.com/):

• Establishing specialty crops can be time-intensive and risky, and requires adequate up-front capital.• Wineries have to work together to expand capacities. Attention to consistent and quality bottling and

creating a brand creates an image for the region.• It is important to combine other services with selling wine, such as entertainment, and tourism and

economic development agencies work with wineries to increase economic activity. A Beef Producer (at Rustle Hill Winery): • Food safety standards for meat processing, administered by the USDA and State of Illinois, can be dif-

ficult for small facilities to meet. Local meat producers may sell unprocessed animals to consumers to avoid high transportation costs to Tier 1 slaughter facilities that allow meat products to be sold com-mercially.

• Brands that represent rather arbitrary characteristics, such as Certified Angus Beef’s criteria of a black hide and 1/16 Angus heritage, can command price premiums.

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• Country of Origin Labeling is a contentious issues that relates to source-identified branding associated with food hubs.

• Because of differing health regulations, local meat processing services are completed on a stand-alone basis. However, food hubs can successfully service cattle producers by assisting with distribution and branding.

• Cattle producers, along with other types of producers, face regulatory challenges when seeking to export products out-of-state.

Dixon Springs Agricultural Research Center (http://research.aces.illinois.edu/rec/dixon-springs): • Significant beef research is taking place on site, as well as forestry research, although there are spe-

cific land use regulations posed on the portion of research station property leased from the US Forest Service.

• Dixon Springs has used the “Pick Your Own” marketing concept to respond to issues with labor. Popu-larity of the “Pick Your Own” paradigm varies. Recently, consumers want the “farm experience.”

• New tools and infrastructure, such as non-heat greenhouses, or “high tunnels”, are being expanded.• Research is essential to efficient system flows and keeping up with changes in genetics/new products.• Research center needs advocacy. Two Agricultural Producers (at the Dixon Springs Agricultural Research Center): • The main focus and marketing niche of specialty growers is on getting fresher product to consumers.• Producers must adapt to changes in advertising and social media.• There is a goal to promote the value of living off-the-land with younger generations.• Producers require quality workers. In the representatives’ experience, migrants will do the labor and

are devoted to their employers.• In order to maintain customer loyalty, producers cannot sell anything less than high-quality/fresh food.• Choosing to participate in a Farmers Market requires significant investment of growers’ time and trav-

el, and does not guarantee profitable sales when the market is flooded with a specific product or poor weather keeps shoppers away.

• Exporting internationally is important for specific brands.• Some counties in the study area do not have grocery stores as a result, road-side stands are significant

contributors in these counties.• Buying land can be difficult and expensive. The Land Connection, a nonprofit organization based in

Champaign, assists with this process.• Diversification allows producers to be more active throughout the off-season.

Appendix

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Appendix Suitability Weighting(chart on drive)